Thomas Ryan

Tired of hearing about “paradigm shifts” from business gurus?

So am I. So I’ll just call my idea for construction employers a suggestion.

Instead of reducing costs by cutting employee benefits, how about looking to improve your management systems to increase profits?

Here’s what I mean.

The end of a year is the time when many companies look at health and fringe benefits. With the out-of-this-world cost of health insurance, many company owners and senior managers look at alternative providers of health insurance. Although it is good stewardship—a word that is incorporated into the name of our company—to make sure you and your employees are getting the most value for the money, changing providers causes consternation for most people. This includes everyone from top executives to entry-level laborers.

What may seem like a simple learning curve to many folks can actually reduce the overall effectiveness of your organization for months. In many cases charted production levels per man-hour decreased by 35% for up to three months as a result of benefit changes.

Let’s say you are earning $80 per man-hour with 100 man-hours per day on an average. This means you are earning $ 173,200 per month. If you in fact loose 35% effectiveness, for three months your change in health benefits just cost you $181,860.

Now that we just looked at the direct financial cost, let’s take a look at what else happens when workers are distracted. They make mistakes! A worker’s mistake usually causes injuries, quality flaws, material waste or other personnel debacles.

We must also think about one of the most important questions job candidates ask before going to work for a company: What benefits will I have? Health benefits are a major area of concern to most Americans.

You can hardly tune into the news without hearing some story about health care issues. So, if benefits are a major concern, doesn’t it make sense that an employee may start thinking about another employer when he or she hears that their insurance will be changing? You better believe it does. This is not to say a staff member will leave your company just as you change insurers, but it is at the core of the distraction that leads to reduced productivity.

What are some other changes that you have implemented that may have damaged productivity? The change in health coverage is a de-motivating change, for sure. This does not mean all change decreases motivation and focus. For example: if you learn what truly motivates your employees and communicate your needs through changes that feed their self-esteem, they will not only make the changes but they will look forward to them as well. This is due to the principal of What’s In For Me.

Employees want a job they can perform to receive their WIFM while you, the employer, need them to provide your profitability. So your business management practices, whatever you do or use, could increase your productivity.

In other words, the vast majority of companies that restructure their practices or management systems could add to their profits. And you may even add enough to pay for the health benefits that your employees want.

Thomas Ryan is general manager of Stewardship Construction Services Corp., Lansdale, PA, which provides services and training to construction employers. He can be reached at (215) 699-4980 or tryan@stewardship construction.com.

To comment on this viewpoint email Senior Business Editor Richard Korman at kormanr@mcgraw-hill.com.